12 Best Solar Energy Stocks to Invest In Heading into 2023

Published on December 16, 2022 at 4:23 pm by Mohammed Saqib in Hedge Funds, News

In this article, we will discuss the 12 Best Solar Energy Stocks to Invest In Heading into 2023. You can skip our detailed industry analysis and go directly to the 5 Best Solar Energy Stocks to Invest In Heading into 2023.

The shift to sustainable energy to protect the environment has caused the solar power market to grow worldwide. According to SolarPower Europe, the worldwide solar market will double to 2.3 TW in 2025 compared to a global 1 TW capacity in 2022. The exponential growth of the solar energy industry has come about owing to multiple positive triggers, including cost reductions, enhanced affordability, government incentives, improved solar panel durability, concerns surrounding climate change, and subsequent growth in demand.

The US solar power industry is expected to grow by 27.3% in 2022 and is estimated to be valued at $16.9 billion as of 2022. The United States boasts 617 businesses in the industry with an employee base of 5,525 individuals. The global solar power market is projected to grow at a CAGR of 6.9% over the period 2021-2028, growing from $184.03 billion in 2021 to $293.18 billion in 2028. Some of the key players in the industry include First Solar, Inc. (NASDAQ:FSLR), Sunrun Inc. (NASDAQ:RUN) and Enphase Energy, Inc. (NASDAQ:ENPH).

Global X Solar ETF (RAYS) is an ETF tracking the Solactive Solar Index. The ETF is designed to invest in companies that are well-positioned to reap the benefits of the rise in the adoption of solar technology. The companies included in the ETF are involved in the solar power production, development, and manufacturing of solar-powered batteries/generators, etc.

Our Methodology

We started with the holdings of Global X Solar ETF (RAYS) and ranked its holdings using Insider Monkey’s proprietary hedge fund sentiment data which tracks the holdings of over 900 elite hedge funds. So, the stocks we have included in our list are the best solar energy stocks to buy according to hedge funds.

Best Solar Energy Stocks to Invest In Heading into 2023

12. Daqo New Energy Corp. (NYSE:DQ)

Number of Hedge Fund Holders: 20

Headquartered in Shanghai, Daqo New Energy Corp. (NYSE: DQ) is a global leader in the production of high-purity polysilicon for the solar PV sector. The company produces and sells high-purity polysilicon to photovoltaic product manufacturers, who then process the polysilicon into cells, ingots, and modules for solar power solutions.

On December 5, 2022, Chao Ji, an analyst at Goldman Sachs, reduced her price target on Daqo New Energy Corp. (NYSE:DQ) to $70 while keeping a Neutral rating on the stock. According to the analyst, poly prices began to decline in November as a result of industry capacity expansion, and the current price level gives a balance risk/reward to investors.

In addition to Daqo New Energy Corp. (NYSE:DQ), First Solar, Inc. (NASDAQ:FSLR), Sunrun Inc. (NASDAQ:RUN), and Enphase Energy, Inc. (NASDAQ:ENPH) are included in our list of 12 best solar energy stocks to invest in heading into 2023.

At the end of Q3 2022, 20 hedge funds in Insider Monkey’s database were long on Daqo New Energy Corp. (NYSE:DQ) at the end of the quarter. Hillhouse Capital Management remained the leading stakeholder of the company at the end of Q3 2022.

11. Atlantica Sustainable Infrastructure plc (NASDAQ:AY)

Number of Hedge Fund Holders: 21

Atlantica Sustainable Infrastructure plc (NASDAQ:AY) is a United Kingdom-based sustainable infrastructure company that owns, operates, and invests in renewable energy, storage, efficient natural gas and heat, transmission lines, and water assets across North America, South America, and Europe.

On September 19, 2022, Julien Dumoulin-Smith, an analyst at BofA, reduced her price target on Atlantica Sustainable Infrastructure plc (NASDAQ:AY) to $34. The company’s Q3 revenue stood at $303.12 million, missing market expectations by $24.66 million. The Normalized EPS stood at -$0.11, missing market expectations by $0.47.

As per Insider Monkey’s database, 21 hedge funds had stakes in Atlantica Sustainable Infrastructure plc (NASDAQ:AY) at the end of the third quarter. Renaissance Technologies remained the leading stakeholder in the company at the end of Q3 2022.

10. Shoals Technologies Group, Inc. (NASDAQ:SHLS)

Number of Hedge Fund Holders: 21

Shoals Technologies Group, Inc. (NASDAQ:SHLS) is a leading provider of EBOS solutions and components for solar energy projects. The company sells EV Charging solutions in the United States for public and fleet electric car charging stations. Shoals Technologies Group, Inc. (NASDAQ:SHLS) primarily sells to engineering, procurement, and construction organizations that develop solar energy projects and install electric car charging stations.

On November 16, 2022, Christine Cho, an analyst at Barclays, increased her price target on Shoals Technologies Group, Inc. (NASDAQ:SHLS) to $30 while keeping an Equal Weight rating on the stock. According to the analyst, the company is still in a strong position with improved backlog visibility and a more enticing value proposition.

According to Insider Monkey’s database, 21 hedge funds had stakes in Shoals Technologies Group, Inc. (NASDAQ:SHLS) at the end of the September quarter. Electron Capital Partners remained the leading stakeholder of the company at the end of the third quarter.

ClearBridge Investments made the following comment about Shoals Technologies Group, Inc. (NASDAQ:SHLS) in its Q3 2022 investor letter:

Shoals Technologies Group, Inc. (NASDAQ:SHLS) manufactures electrical balance of systems (EBOS) components for ground-mounted solar projects and has been gaining market share for quality of service and price. Shoals is also starting to develop an EV charging infrastructure business. We previously owned Shoals and sold our position earlier this year as supply chain issues were negatively affecting margins. Improving supply chain dynamics should support the stock, and tax credits for clean energy production and investment in the IRA should further act as a tailwind for Shoals.

9. Canadian Solar Inc. (NASDAQ:CSIQ)

Number of Hedge Fund Holders: 22

Canadian Solar Inc. (NASDAQ:CSIQ) is one of Canada’s world’s largest solar technology and renewable energy firms. The company is a major solar photovoltaic module producer and a manufacturer of battery storage projects with a diverse geographical pipeline at various stages of development.

On November 22, 2022, Canadian Solar Inc. (NASDAQ:CSIQ) reported third-quarter results. The revenue was reported at $1.93 billion, missing market expectations by $140 million. The Normalized EPS of the company stood at $1.12, beating market expectations by $0.74. The CEO, while commenting on the results, stated that despite the macroeconomic challenges and COVID-19 shutdowns, the company has achieved a 123% increment in its net income on a YOY basis.

As per Insider Monkey’s database, 22 hedge funds remained bullish on Canadian Solar Inc. (NASDAQ:CSIQ) at the end of Q3 2022. Millennium Management came out to be the biggest holder of the company’s shares at the end of the quarter.

8. Sunnova Energy International Inc. (NYSE:NOVA)

Number of Hedge Fund Holders: 25

Sunnova Energy International Inc. (NYSE:NOVA) provides home solar and energy storage services. The company delivers energy resilience and dependability to solar plus energy storage consumers through energy storage technology. Services provided by the company include operations and maintenance, monitoring, repairs and replacements, equipment upgrades, and onsite power optimization. Sunnova Energy International Inc. (NYSE:NOVA) has roughly 195,000 subscribers in over 25 states and territories.

On December 13, 2022, Biju Perincheril, an analyst at Susquehanna, reiterated his Positive rating on Sunnova Energy International Inc. (NYSE:NOVA) as he believes that the company’s supply chain is improving, and the management is confident about achieving targets. The analyst currently has a price target of $38 on the stock.

25 hedge funds are currently bullish on Sunnova Energy International Inc. (NYSE:NOVA) as per Insider Monkey’s database. Moore Global Investments had the leading stake in the company at the end of Q3 2022.

Here is what ClearBridge Investments Small Cap Strategy has to say about Sunnova Energy International Inc. (NYSE:NOVA) in its Q3 2022 investor letter:

Within the utilities sector, solar power and energy storage company Sunnova (NYSE:NOVA) saw its share price benefit from passage of the Inflation Reduction Act legislation, which includes an array of new and extended tax credits that should not only support but enhance the company’s long-term growth prospects.

7. SunPower Corporation (NASDAQ:SPWR)

Number of Hedge Fund Holders: 26

SunPower Corporation (NASDAQ:SPWR) is a leading provider of solar technology and energy services that provides fully integrated solar, storage, and home energy solutions to consumers, mainly in the United States and Canada, through a variety of hardware, software and financing options, as well as Smart Energy solutions.

On November 9, 2022, Biju Perincheril, an analyst at Susquehanna, increased his price target on SunPower Corporation (NASDAQ:SPWR) to $27 while keeping a Positive rating on the stock. According to the analyst, the company’s Q3 revenue and EBITDA exceeded expectations as the company continued to execute with high volumes.

As per Insider Monkey’s proprietary database, 26 hedge funds were bullish on SunPower Corporation (NASDAQ:SPWR), as of the end of the third quarter. D E Shaw was the biggest stakeholder in the company’s stock at the end of Q3 2022.

6. Array Technologies, Inc. (NASDAQ:ARRY)

Number of Hedge Fund Holders: 29

Array Technologies (NASDAQ: ARRY) is a global utility-scale solar tracker technology. SmarTrack, a machine learning program that identifies the ideal location for a solar array in real time to improve energy output, and DuraTrack HZ v3, a single-axis solar tracking system, are among the company’s products. Array Technologies (NASDAQ: ARRY) products are sold to engineering, procurement, and construction businesses that build solar energy projects, as well as to solar developers and independent power producers.

On December 6, 2022, Michael Blum, an analyst at Wells Fargo, started covering Array Technologies, Inc. (NASDAQ:ARRY) with a price target of $28 and an Overweight rating on the stock. According to the analyst, policy support, the low cost of solar, and state and federal utility regulations to decarbonize and attain net zero emission will be the driving factor for the company to grow revenues at a CAGR of 10%.

According to Insider Monkey’s database, 29 hedge funds held shares of the company at the end of the third quarter of 2022. Electron Capital Partners was the most bullish fund on the company’s stock at the end of Q3 2022.

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